The epistolary novel is always a tease. There is something ineluctably saucy about the voyeurism of reading someone else's letters and supplanting the intimacy of the addressee. So much so that Samuel Richardson's Pamela created a literary sensation in 1740. His story of the innocent serving wench, abducted by her amorous employer and struggling to preserve her virtue, gripped and titillated the nation as readers pored over poor Pamela's absorbingly self-revealing letters.

The heyday of the epistolary novel is long gone, but Philippa Stockley could not have chosen better than this flirtatious narrative form for her second novel, A Factory of Cunning. Set in England in 1784, it welcomes us to a vividly drawn historical London, replete with mischievous details: 'Carriages ... with liveries hopped up on the back flexing satin buttocks and twitching their queues'. Most mischievous of all is the heroine with whom we arrive in the city, the enigmatic exile 'Mrs Fox'.

Through the different voices of their letters, a patchwork plot accumulates in which the holes are as intriguing as the contested facts. Mrs Fox sets a trap for Urban Fine in the form of an alluring young heiress in need of a husband. But Amaranth, the heiress, is soon revealed as Martha, a dressmaker from Spitalfields. The scene is set for vengeance and intrigue.

In her letters, we become a witness to Mrs Fox's shifting loquacity, her impressive versatility of voice, as she seeks to influence her correspondents in different ways - as mistress to one, innocent to another, even as a melodramatic Gothic heroine: 'Your letter has just fallen from my hand. Such violent trembling overcame me that it was certain I should faint.'

She bolsters these ventriloquial fantasies with gloriously obvious lies, double, triple and quadruple bluffs and an audacious apportioning of blame to anyone but herself (claiming to suffer in her childhood, for instance, 'depravations [sic] the nuns liked to watch').

As we piece together Mrs Fox's history, a life of scandal and vice emerges. Noblewoman, whore, brothel keeper - the name Fox seems all too appropriate as the dark secrets of her past hunt her down.

Eluding retribution and preying on men are her way of life, while she amuses herself by manipulating the guileless Violet, who is unknowingly thrust into the exhibition chamber of a brothel: 'Most of the women were sitting on gentlemen's laps for lack of chairs, quite different from the rectory, but everyone happy and smiling and stroking me as we went past, having the nicest possible time.'

Letters, forgeries, footnotes, newspaper cuttings - information comes at us from all manner of sources. Hyperbole is the norm. Stockley knows the limitations of this form, however, and ironically draws attention to its inevitable clunkiness. As Mrs Fox complains: 'Were you here, we could have a conversation. As it is, everything is cold meat before we taste it.'

These letter writers know that in 18th-century London, if you command language you command life. Words can kill and once her reputation is destroyed by a word, a woman might as well whore herself. Mrs Fox makes much of her propriety when it suits her - 'Only after much agonising have I overcome my shrinking feminine cowardice, forcing myself forward in the world of men,' she writes to one male acquaintance, but she scorns another man's inability 'to mastermind an affair of such feminine complexity'.

A Factory of Cunning is a work of just such complexity, a gripping and intricate narrative which accelerates towards a dramatic denouement. Stockley spins a romantic yarn of travel, murder, intrigue and adventure while resolutely rejecting the sentiment of romance. This is a cracking tale of depravity, our avaricious heroine fiercely committed to life and survival - too awful to like but too fascinating to hate.

· To order A Factory of Cunning for £14.24 with free UK p&p, call the Observer Books Service on 0870 836 0885 or go to www.observer.co.uk/bookshop